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Cephalon Makes A Deal

The newest drug in its cabinet is expected to hit the U.S. market in the fourth quarter.

Cephalon (NASDAQ:CEPH) continues its acquisitive ways, announcing last week its purchase of the rights to market muscle relaxant Amrix for $100 million in cash upfront and possible sales milestone payments.

Amrix was developed by the recently IPOed Italian drugmaker Eurand (NASDAQ:EURX) and then out-licensed to privately held ECR Pharmaceuticals, which licensed it to Cephalon. Both Eurand and ECR trace their roots to an acquisition by Wyeth (NYSE:WYE).

Amrix is a once-a-day extended release formulation of the generic cyclobenzaprine hydrochloride, designed to help with muscle spasms. Extended release versions of compounds launched by other drugmakers in the past year have been hit-or-miss. Sanofi-Aventis' (NYSE:SNY) Ambien CR has gotten off to a good start, whereas GlaxoSmithKline's (NYSE:GSK) Coreg CR has disappointed investors.

Cephalon has been no stranger to acquisitions in the past. Deals such as its $514 million acquisition of CIMA Labs four years ago are just starting to pay off now that sales of pain drug Fentora are taking off.

It won't take nearly as long to see the Amrix deal bear fruit for Cephalon since ECR received FDA approval to market the drug in February and Cephalon expects to begin selling the compound in the U.S. in the fourth quarter. Cephalon's agreement with ECR gives it full North American marketing rights, and with a pain sales franchise already in place, investors will know relatively soon whether Cephalon pulled off another coup or just flushed $100 million down the toilet.

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